The Relationship between Audit Committee Characteristics on Accounting-based Performance (ROA and ROE) as a Measure of Performance Evidence from Jordan

Abstract

The study aims to investigate the effect of audit committee characteristics, represented in (size, independence, and meeting) to the enhancement of performance, for a sample of 460 Jordanian non-financial companies listed at Amman Stock Exchange (ASE) during the period of (2014-2018). To achieve this goal, the performance was measured using the return on assets (ROA) and return on equity (ROE). The study also utilized two control variables in order to help to measure the relationship between audit committee (AC) and performance. Overall, A fixed-effect model was used to test various hypotheses of the study. The study found a significant positive relationship between the auditing committee characteristics (AC size, AC independence, and AC meeting) with ROA and ROE in the Jordanian non-financial listed Companies. The study contributes to the literature on audit committee characteristics and performance in developing countries, especially in Jordan. Our findings contribute towards better articulating and applying a more concrete measure of performance that as an accounting based performance (ROA, ROE). This study provides useful information that is of great value to policymakers, academics, and other stakeholders. Based on the study results, researchers made a number of recommendations that include: researchers and academic staff must study in the future researches some of the other variables, such as expertise in AC, Muslim director in AC, and activities in AC in order to enhance corporate at Amman Stock Exchange.

Keywords: AC size, AC independence, AC meeting, accounting-based performance, Jordan.